Following a review of working capital and the balance sheet, ASL has foreshadowed a non-cash impairment of $75-95m in FY19. Coming in a year where reported and underlying numbers will already differ significantly due to the accounting treatment of the Barminco acquisition, it allows new management to start FY20 with a clean slate. Importantly, guidance of $98m underlying NPAT was reiterated, with the implied 2H19 outturn of ~$58m providing an indication of what to expect in FY20. The 1H19 results endorsed the Barminco acquisition, and we expect a coming period where the focus will be on capital discipline, cash-flow, and appropriate returns on capital. Our blended valuation remains $2.15 and we reiterate a BUY call.
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